The week in review – 13th March 2023

March 14, 2023

UK

The Office for National Statistics (ONS) reported that gross domestic product (GDP) grew 0.3% during January, after shrinking by 0.5% in December. This was a faster recovery than expected and a firm move away from recession territory.
The Royal Institute of Chartered Surveyors (RICS) house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, dropped to -48 in February from -46 the previous month, the lowest reading since April 2009. The RICS report confirmed UK house prices were still on a downward trajectory.
Factoring in house prices across different time periods, the average house price rose 1.1% in February, following a 0.2% increase in January and a 1.3% drop in December, as reported by Halifax. This left the annual rate of house price growth unchanged, at +2.1% for the third month running. But on a quarter-on-quarter basis, prices were down 2.5%.
The Society of Motor Manufacturers and Traders (SMMT) reported that the new car market grew by 25% in February on a year-on-year basis, despite the squeeze on household incomes from the cost-of-living crisis. Plug-in electric vehicles accounted for a quarter of the registrations, meaning almost half a million plug-in cars are expected to join the road by the end of 2023.

The US unemployment rate has risen to 3.6% for February, with the total number of unemployed persons moving to 5.9 million, as reported by the Bureau of Labor Statistics.
However, the Non-Farm Payroll, a closely-watched measure of US employment, rose by 311,000 in February, rather stronger than the 205,000 expected.
Ripples were felt in developed markets last week, as US regulators shut down Silicon Valley Bank (SVB) and took control of its customer deposits. This was the largest failure of a US bank since 2008, and came after the bank failed to raise new capital to strengthen its balance sheet.
US financial regulators rolled out emergency measures on Sunday night to stem potential contagion from the collapse of SVB, ensuring depositors would have access to all their money and the wider market remained calm.
SVB’s UK arm was acquired by HSBC for £1, which will potentially save thousands of British tech start-ups and investors from big losses if they couldn’t access deposits.

The third estimate of Eurozone Q4 GDP showed a small downward revision, with the Eurozone economy confirmed as having stalled in the quarter, compared with the previous estimate of 0.1% growth. The adjustment was mainly due to downward revisions in Germany and Ireland.
The S&P Global Eurozone Construction Total Activity Index rose from 46.1 in January to 47.6 in February – still below the 50-point mark representing stagnation. The relative improvement in the headline index was supported by softer drops in both residential and civil engineering activity, as reported by S&P Global.

Chinese exports in US dollar terms fell 6.8% year-on-year in the first two months of the year, a slower pace of decline than in November-December (-9.4%) and better than market consensus. New export orders picked up in February, as supply chains in China returned to normal. However, the outlook for exports remains weak, reflecting the global slowdown and the unwinding, across the world, of pandemic-related demand for goods.